Analysts at BBH note that the euro remains in a range with the bottom is near $1.22 and the top near $1.24 and as there were a few violations last month but attempts to play a breakout were quickly punished.
“The fact that the euro has gone nowhere in the face of widening differentials (two-year spread has widened from 200 bp to nearly 300 bp over the past six months), fairly consistent downside data surprises this year, and the ECB pushing unusually hard against hawkish comments by one of the national central bank governors, speaks to its resilience. Three-month implied volatility has now completely unwound the run-up in the middle of Q1 and below 6.5% is the lowest since mid-January. There may be some more scope for a near-term decline, but it has not been below 6% since 2014.”
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